A Shortage of Affordable Homes

A Shortage of Affordable Homes

MARCH 2018

A Shortage of Affordable Homes

MARCH 2018

ANDREW AURAND, Ph.D., MSW Vice President for Research DAN EMMANUEL, MSW Senior Research Analyst DIANE YENTEL, MSSW President and CEO ELLEN ERRICO Creative Services Manager MARJORIE PANG Research Intern

ABOUT NLIHC

The National Low Income Housing Coalition is dedicated solely to achieving socially just public policy that assures people with the lowest incomes in the United States have affordable and decent homes. Founded in 1974 by Cushing N. Dolbeare, NLIHC educates, organizes and advocates to ensure decent, affordable housing for everyone. Our goals are to preserve existing federally assisted homes and housing resources, expand the supply of low income housing, and establish housing stability as the primary purpose of federal low income housing policy.

The National Low Income Housing Coalition 1000 Vermont Avenue, NW ? Suite 500 Washington, DC 20005 202-662-1530 ? ? 2018 National Low Income Housing Coalition

NLIHC BOARD OF DIRECTORS

Greg Payne, Chair, Portland, ME William C. Apgar, Orleans, MA Dara Baldwin, Washington, DC David Bowers, Washington, DC Delorise Calhoun, Cincinnati, OH Emma "Pinky" Clifford, Pine Ridge, SD Lot Diaz, Washington, DC Chris Estes, Washington, DC Daisy Franklin, Norwalk, CT Dora Leong Gallo, Los Angeles, CA Matt Gerard, Minneapolis, MN Deidre "DeeDee" Gilmore, Charlottesville, VA Isabelle Headrick, Austin, TX Moises Loza (Honorary), Alexandria, VA Rachael Myers, Seattle, WA Marla Newman, Winston-Salem, NC Ann O'Hara, Boston, MA Bob Palmer, Chicago, IL Eric Price, Washington, DC Tara Rollins, Salt Lake City, UT Nan Roman, Washington, DC Shauna Sorrells, Kensington, MD Michael Steele, New York, NY Martha Weatherspoon, Clarksville, TN

NLIHC STAFF

Andrew Aurand, Vice President for Research Victoria Bourret, Housing Advocacy Organizer Josephine Clarke, Executive Assistant Dan Emmanuel, Senior Research Analyst Ellen Errico, Creative Services Manager Ed Gramlich, Senior Advisor Paul Kealey, Chief Operating Officer Mike Koprowski, Director, Multisector Housing

Campaign Joseph Lindstrom, Manager of Field Organizing Lisa Marlow, Communications Specialist Sarah Mickelson, Senior Policy Director Khara Norris, Director of Administration James Saucedo, Housing Advocacy Organizer Christina Sin, Development Manager Debra Susie, Disaster Housing Recovery Coordinator Elayne Weiss, Senior Policy Analyst Renee Willis, Vice President for Field and

Communications Diane Yentel, President and CEO

Design and Layout by Ellen Errico, NLIHC Creative Services Manager.

TTHAE GBALP E OF CONTENTS

A SHORTAGE OF AFFORDABLE HOMES, 2018

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Current Shortage of Affordable Rental Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Cost Burdens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Every State and Large Metro Area Has a Housing Shortage for Extremely Low Income Renters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A Closer Look at Extremely Low Income Renter Households. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Extremely Low Income Renters with Severe Cost Burdens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Federal Policy Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 About the Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 For More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Appendix A: State Comparisons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Appendix B: Metropolitan Comparisons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

NATIONAL LOW INCOME HOUSING COALITION

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THE GAP

A SHORTAGE OF AFFORDABLE HOMES, 2018

INTRODUCTION

One of the biggest barriers to economic stability for families in the United States struggling to make ends meet is the severe shortage of affordable rental homes. The housing crisis is most severe for extremely low income renters, whose household incomes are at or below the poverty level or 30% of their area median income (see Box 1). Facing a shortage of more than 7.2 million affordable and available rental homes, extremely low income households account for nearly 73% of the nation's severely cost-burdened renters, who spend more than half of their income on housing.

Even with these housing challenges, three out of four low income households in need of housing assistance are denied federal help with their housing due to chronic underfunding. Over half a million people were homeless on a single night in 2017 and many more millions of families without assistance face difficult choices between spending their limited incomes on rent or taking care of other necessities like food and medical care (HUD, 2017; Joint Center for Housing Studies, 2017). Despite the serious lack of affordable housing, President Trump proposes further reducing federal housing assistance for the lowest income households through budget cuts, increased rents and work requirements.

KEY FINDINGS OF THE REPORT INCLUDE:

? The nation's 11.2 million extremely low income renter households account for 25.7% of all renter households and 9.5% of all households in the United States.

? The U.S. has a shortage of more than 7.2 million rental homes affordable and available to extremely low income renter households. Only 35 affordable and available rental homes exist for every 100 extremely low income renter households.

? Seventy-one percent of extremely low income renter households are severely cost-burdened, spending more than half of their incomes on rent and utilities. They account for 72.7% of all severely cost-burdened renter households in the United States.

? Thirty-two percent of very low income, 8% of low income, and 2.3% of middle income renter households are severely cost-burdened (see Box 1).

? Of the eight million severely cost-burdened extremely low income renter households, 84% are seniors, persons with disabilities, or are in the labor force. Many others are enrolled in school or are single adults caring for a young child or a person with a disability.

Based on the American Community Survey (ACS), this report presents data on the affordable housing supply, housing cost burdens, and the demographics of severely impacted renters. The data clearly illustrate a chronic and severe shortage of affordable homes for the lowest income renters who would be harmed even more by budget cuts and other restrictions in federal housing programs.

BOX 1: DEFINITIONS

AREA MEDIAN INCOME (AMI): The median family incomes in the metropolitan or nonmetropolitan area EXTREMELY LOW INCOME (ELI): Households with incomes at or below the Poverty Guideline or 30% of AMI, whichever is higher VERY LOW INCOME (VLI): Households with incomes between ELI and 50% of AMI LOW INCOME (LI): Households with incomes between 51% and 80% of AMI MIDDLE INCOME (MI): Households with incomes between 81% and 100% of AMI ABOVE MEDIAN INCOME: Households with incomes above 100% of AMI COST BURDEN: Spending more than 30% of household income on housing costs SEVERE COST BURDEN: Spending more than 50% of household income on housing costs

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NATIONAL LOW INCOME HOUSING COALITION

THE GAP

A SHORTAGE OF AFFORDABLE HOMES, 2018

Work requirements and time limits are not meaningful reforms to the housing safety net given that most of those who need federal housing assistance and those who already receive it are elderly or disabled, or they are already in the labor force (Fischer, 2016). Time limits for federal housing assistance would further contribute to housing insecurity among extremely low income households working in low-wage jobs. No data exist showing that work requirements lift people out poverty or do not increase housing instability among vulnerable extremely low income renters (Levy, Edmonds, & Simington, 2018).

Housing assistance provides vulnerable families with the stable housing they need to achieve positive economic, educational, and health outcomes.

Housing assistance provides vulnerable families with the stable housing they need to achieve positive economic, educational, and health outcomes. Taking away housing assistance from struggling families will not help them find gainful employment, receive quality education, or obtain the job training necessary to alleviate poverty. Research shows that the lack of stable housing can result in the loss of employment (Desmond & Gershenson, 2016), interrupt student learning, and decrease academic achievement (Brennan, Reed, & Sturtevant, 2014).

NLIHC urges policymakers to focus on real solutions to housing instability, including a bold and sustained commitment to proven affordable housing programs to ensure that everyone has a safe, accessible and affordable home.

THE CURRENT SHORTAGE OF AFFORDABLE RENTAL HOMES

Of the 43.8 million renter households in the U.S., 11.2 million (more than one-quarter) are extremely low income. Assuming housing costs should consume no more than 30% of a household's income, a common standard of housing affordability, approximately 7.5 million rental homes are affordable to extremely low income renters, leading to an absolute shortage of approximately 3.7 million affordable rental homes. Extremely low income renters are the only income group facing an absolute shortage of affordable units.1

The shortage of affordable rental units becomes a surplus higher up the income ladder, because households with more income can afford a wider range of housing prices (Figure 1). For example, there are 8.7 million rental homes specifically affordable to the 6.6 million very low income renter households with incomes between 31% and 50% of AMI. Very low income households, however, can also afford the 7.5 million rental homes affordable to extremely low income households, meaning there are 16.2 million rental homes affordable to very low income households. Likewise, there are almost 9 million low income renter households with incomes between 51% and 80% of AMI and 19.1 million rental units affordable specifically to them. Including rental homes affordable to extremely low income and very low income renter households, the supply of affordable rental housing for low income households is 35.3 million units.

1 Throughout this report, we use renters and renter households interchangeably to refer to renter households.

NATIONAL LOW INCOME HOUSING COALITION

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